McDATA headquartered in Broomfield, Colorado, provided storage networking and data infrastructure solutions worldwide. Customers used McDATA products to connect application servers with high performing storage across high speed Fibre Channel dedicated Storage Area Networks. Storage OEMs, such as EMC and IBM integrated McDATA switching infrastructure with their storage solutions, providing turnkey solutions to customers. McDATA enjoyed a reputation for delivering highly reliable and high performing products for customers demanding zero downtime and low latency in highly transactional environments such as banking, financial trading and insurance.
McDATA’s solutions included two distinct families of hardware products: Directors and Fabric Switches. Directors are ultrahigh capacity data switches serving the enterprise market. McDATA owned approximately 90% of the worldwide Director market and was in an enviable position relative to competitors. Its rich heritage in ESCON and FICON, high performance mainframe computer switching technology, paved the way to build state-of-the-art Director class products.
Fabric Switches, by contrast, provide the same general function as Directors but contain far fewer connectivity ports, have less built in redundancy, and are targeted primarily at the mid-market. In these smaller environments, ease-of-use and costs are key concerns and buying criteria for customers. In the time frame of this case study, many customers were making use of Storage Area Networks for the first time. While McDATA enjoyed a significant share of the Director Market, its share of the Fabric Switch market was relatively small compared to its rival, Brocade.
McDATA’s initial Fabric Switch offering was far costlier to build than Brocade’s as it leveraged the company’s Director class architectural components. In addition, it was more complex to configure and manage than Brocade’s offering. Doug Rainbolt, McDATA’s VP of Switch Products was presented the challenge of creating a far more significant share in the Fabric Switch Market. The stated challenge was to quickly take share from Brocade without disrupting McDATA’s legacy flagship Director class business. A difficult challenge to take on as Engineering, Operations, and Sales were centralized functions. If too many resources were allocated to Engineering, for example, it could jeopardize future Director design and delivery and hence, severely impact revenues.
Doug and his team partnered with Engineering to devise a multi-pronged strategy. This included:
- Address Cost Concerns: Engineering took the lead in looking for creative ways to preserve advanced functionality while dramatically reducing footprint costs. The team cleverly leveraged some existing IP to quickly package high performance integrated core switching functionality onto a single chip design. Through excellent engineering, an ASIC was quickly fabricated, creating an excellent building block for a next generation Fabric Switch. Product Management took it a step further, conceiving a concept it called FlexPorts. FlexPorts provided the ability to turn on additional ports through non-disruptive software keys. In other words, a customer could purchase a product with just eight ports enabled, and later add eight additional ports without ever bringing the switch offline. Doug and his team’s research suggested that this would be a huge benefit to cost sensitive customers mindful of investment protection.
For OEM partners, FlexPorts provided an excellent selling point to appeal to cost sensitive customers. But it also provided an excellent means to reduce SKU counts. Rather than stocking three different products, an OEM could stock just one, plus an upgrade kit. When customers upgraded, the kits were sent to customers creating an additional revenue stream. The net of it was greater margin potential for both McDATA and the OEM partner- while addressing the cost concerns of customers.
- Address Ease of Use: Product Management carefully analyzed competitive products and interviewed users to devise a new web based management framework that greatly simplified SAN Management .
- Branding: The marketing team devised a branding strategy in collaboration with Tallman Insights for its Fabric Switch family. Clearly understanding the needs of customers, McDATA built a brand that would keep true to delivering powerful, scalable, cost effective, and simple to configure products. The brand name “Spherion” was selected and a messaging framework created to communicate the brand attributes to customers, partners, and industry influencers.
- Segmentation: While the team knew that many Director Class customers (large banks for example) would use Spherion products to round out large SAN fabrics, there would be a whole new class of customers, that McDATA had not sold to before. The objective was to quickly earn this new segment’s trust and have new customers entrust their precious data to McDATA infrastructure. The team researched the workflows of midmarket customers, identifying how Spherion would help in both performance boosts and cost reduction and provided extensive data to back it up. In addition, working with its OEM product marketing teams, “whole product “ attributes were considered and packaged into “Simple SAN” messages. The team understood that customers just didn’t purchase Fabric Switches, they purchased complete solutions consisting of switches, server connects, storage, and support. SAN bundles were created that made it easier for those new to shared storage to make the leap and purchase the products.
- Business Development: Rainbolt and his team spent considerable time visiting OEM partners both sharing Spherion’s capabilities and presenting end user collected data to support the messaging and the go-to-market approach. Considerable time was devoted to enabling the OEMs to fully support the FlexPort approach including setting up IT infrastructure to issue software keys enabling upgrades. Product launch objectives were established with OEM partners. It was imperative that when McDATA announced the Spherion family that its OEM partners were ready to supply product and support it.
- Education and Promotion: As McDATA lacked a presence outside of the Director Segments, it spent considerable time evangelizing the use of SANs within the mid market. It was important to first educate would be users on the importance of the SANs and the cost savings and management simplicity that could be realized when adopted. FlexPorts became a very important element of the message- a model of how to scale cost efficiently. The team spoke at numerous events and conducted a number of interviews with the press and key industry analyst. The result was significant press coverage.
McDATA realized significant growth from a successful launch of its Spherion product line. Prior to the introduction of Spherion, revenues for fabric switches were approximately $30 million per year. Within 12 months of launching Spherion, McDATA was realizing revenues in excess of $100 million for this category. The FlexPort concept became extremely popular with both OEMs and end user customers alike, redefining the market. McDATA emerged as both the market and thought leader in this segment. Brocade would later go on to acquire McDATA. Brocade made other notable acquisitions and expanded its reach into to new markets. Today, Brocade’s annual revenues exceed $2 billion.
Contact Doug Rainbolt